120-day agreement labeled as season can be treated as ordinary rent and prevent advance charge
According to O Antagonista, agreements longer than 90 days tend to be read as residential leasing, which can make it illegal to demand several months paid up front.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM O ANTAGONISTA · 3 MIN
A 120-day contract called a season may not be treated as a season under the law. According to O Antagonista, the case that serves as an example is that of Paulo, owner of a beach house who asked for four months' payment upon entry. According to Law 8,245/1991, the maximum period of the season is 90 days, and a longer contract is usually interpreted as a traditional residential lease.
According to the report, article 48 of the law characterizes the season as a rental for temporary housing, whether for leisure, taking a course, taking care of one's health, renovating the property itself or any other situation with a defined period. The house can come furnished or unfurnished. If there is furniture, the document must describe each item and state its condition.
Outside this framework, the rule changes. Article 20 prohibits demanding rent in advance, with exceptions for the season and for rentals without any guarantee. Also according to O Antagonista, article 43 makes it a crime, in the form of a misdemeanor, to charge in advance made outside of these exceptions: the penalty ranges from five days to six months of simple imprisonment, or a fine equivalent to three to twelve months, calculated on the updated value of the last rent and owed to the tenant. Article 49 authorizes anyone who owns a seasonal property to pocket, in a single payment, the total rent and charges.
The deadline also influences the resumption. According to article 47, a contract lasting less than 30 months becomes, upon termination, a lease for an indefinite period, and the property only returns to the owner's hands in situations provided for by law: default, need of the owner or family member, work with approval from the public authorities, or contract that has already exceeded five uninterrupted years. In turn, article 50 says that, when the renter stays for more than 30 days after the end of the season without opposition from the owner, the contract becomes valid for an indefinite period and the requirement for advance payment can no longer be made. Therefore, the owner can only recover the property after 30 months from the beginning of the lease, or when it fits into one of the situations in article 47.
The deposit also has a ceiling. According to the report, legislation restricts the amount of this deposit, and the example given involves a property owner who required four months as a guarantee, an amount above the permitted limit. The vehicle also reminds us that owning a home is governed by the Tenancy Law, which reinforces the view that the contract label is not enough to rule out the rules of common tenancy.
What changes for the investor
For those who invest in seasonal rental properties, the central point is the predictability of cash flow. If the reading pointed out by O Antagonista prevails in disputes, owners who count on receiving several months in advance, or on the rapid repossession of the property, may face less predictable deadlines and revenues. The effect tends to weigh more on portfolios and businesses linked to this type of leasing than on the market for listed assets, whose link to the topic was not determined by the report. The analysis is of regulatory risk and does not indicate price direction or purchase or sale recommendations.
Automatically translated from Portuguese.
